The equity held will not be transferred to China Resources Enterprise

In an interview with the media, SABMiller Asia’s CEO Anton also stated that “even if Huachuang succeeds in divesting other non-beer businesses, there will be no direct change in the shareholder structure (China Resources Snow), and this implied intention is clearer.

China Resources Enterprise (0291.HK) is becoming a company focusing on beer business, but SABMiller's 49% stake in China Resources Snow is not likely to be incorporated into listed companies. “SABMiller executives attach great importance to the 49% stake in China Resources Snow.” Recently, a SABMiller senior executive in China, who asked not to be named, made it clear that it is impossible to let go.

On April 21st, Suntron announced the sale of its non-beer business to the parent company China Resources Group, focusing on the beer business. Its subsidiary, China Resources Snow, is currently the absolute leader of China Beer, but Huachuang only has a 51% stake in China Resources Snow, and the rest The stake is in the hands of SABMiller, the world's largest beer company. Since Huachuang is determined to become a beer-focused company, the biggest concern of the capital market and the beer industry is whether this 49% stake will be incorporated into the listed company through proper capitalization. SABMiller’s attitude clearly makes this possible. The short term looks very low. However, in the long-term, it is a win-win choice for all the shares of China Resources Snow to be listed on the listed company. SABMiller, who feels that there is a presence in the Chinese market, can obtain the equity of China Resources Listed Corporation through proper capital operation to solve this problem.

In an interview with the media, SABMiller Asia’s CEO Anton also stated that “even if Huachuang succeeds in divesting other non-beer businesses, there will be no direct change in the shareholder structure (China Resources Snow), and this implied intention is clearer.

Chinese beer continues to grow

In the past years, SABMiller seldom faced the Chinese media, so it was difficult for the outside world to know its Chinese market development strategy and observation of the Chinese beer market. Even the relationship with China Resources and its role in China Resources Snowflake was rarely reported.

“In the past 20 years, we have very good relations with China Resources Group. We are in the same building in Hong Kong and we often visit each other.” Anton told reporters. In 1994, China Resources Enterprise, a subsidiary of the China Resources Group, and SABMiller, the world's second-largest beer company, jointly formed China Resources Snow. This is one of its most successful investments in the world, because now Snow has occupied the largest share of the world's largest beer market, and has become the world's largest single-brand sales.

The largest fish is of course related to the largest pond. The rapid growth of snowflakes is of course related to the rapid development of the Chinese beer market. In the past years, the Chinese beer market has grown at a double-digit rate. However, this kind of rapid growth can continue to receive more and more suspicions. Of particular note is the 0.96% drop in the Chinese beer market in 2014. What will happen to Chinese beer in the future? “First of all, there is such a view that the production and sales volume of Chinese beer has reached the short-term and medium-term cyclical cap of consumption capacity at present.” said Yong Yong, Deputy Secretary-General of the China Alcohol Association and Secretary-General of Beer Branch. One of the reasons is that China's per capita consumption has exceeded the world average of 33 liters, reaching 34.2 liters.

However, Anton believes that there is still a strong growth opportunity for the Chinese beer market in the future. “China's beer alcohol content is relatively low, so there is no need to worry about per capita consumption.” Moreover, per capita consumption of Chinese beer is not small compared with developed countries. gap.

This belief that the Chinese market continues to grow will obviously affect the marketing strategy of China Resources Snow. To sell and to profit is a dilemma for Chinese beer companies. In the fierce market competition, if you simply want profits to lose the market, the future profits will not be sustained. Therefore, sales tend to be many companies five years ago. The choices, and with the development of the market over the past few years, many corporate strategies including snowflakes have begun to change: Start paying attention to the balance of sales and profits. However, if the company's judgment is that there is still room for growth in the future, the balance of sales and profits will not be entirely in favor of profits.

“I think that the economic slowdown in the past six months does not mean that the next decade will still be the same, so we still believe that there will be no growth in the Chinese beer industry in the future. There is no particular challenge,” said Anton. "Our strategy is still a combination of sales volume and profit, and our long-term strategy will not change." According to the 2014 earnings report of China Resources Enterprise, the turnover of the company's beer business was HK$34.482 billion, a year-on-year increase of 4.5%; Profit of HK$761 million, representing a year-on-year decrease of 19.3%. “Our profits are slightly worse than our competitors because we reinvested the money we earned into other places to develop these markets. It is possible that after seven years we can see a substantial increase in our profits.”

The observation made by the settlement of the global market is that beer consumption in the mature markets such as the United States, Australia, and the United Kingdom has slowed, but the craft beer market is expanding. And, "From a global perspective, beer will gain some share from the spirits market and it will grow."

Nuggets Rural Market

Anton believes that there have been two changes in the Chinese beer market, the gentrification of products and the convenience of sales. The former can be felt from the emphasis of snow on fine wine. “The biggest change in the beer market is that the mainstream liquor has moved up. The mainstream liquor has even reached the mid-range price,” Zeng Shenping, general manager of China Resources Snow Marketing Center, told reporters.

Zeng Shenping stated that “a vast rural market is another opportunity for growth in the future. This increase is not necessarily due to the increase in the number of consumers because the rural population is relatively serious and more rural consumers. The consumption pattern has undergone major changes. The original consumers who drank low-end white wine and self-brewed rice wine will gradually become beer consumers as the awareness and capability of the distributors increase and beer products are in place.

Zhang Wujiu, vice president of the China Food Fermentation Industry Research Institute, also agrees with this view, but he believes that the increase in rural spending power is a key factor. “The continuous increase in China’s per capita income opens up a very broad prospect for the rural market. China’s rural life Relatively speaking, it is somewhat impoverished. The increase in income of this group will inevitably bring new markets to beer."

Of course, the first thing the Nuggets rural market should consider is the second change mentioned by the settlement: Convenience, which is usually the last kilometer problem, because the industry can only send wine to the township. According to the public information provided by Snowflake, Snowflake is working hard to solve this problem. “We associate dealerships with terminals, from townships to villages, and get through this road.” For example, in certain markets in Guizhou, Snow has asked distributors to turn products over the mountains. Send to each retail outlet in the stockade.